History
Geovic spent years designing its Cameroon cobalt-nickel-manganese mine, but financing never arrived, and by August 2014 it faced delisting, costly related-party loans and a small equity line.
2007-2011: Designing the Nkamouna mine
Geovic's main project was Nkamouna, a cobalt-nickel-manganese deposit in Cameroon held through Geovic Cameroon (GeoCam), then 60% owned. In October 2007 it said a final feasibility study was due that November, with production targeted for the second quarter of 2010. The study arrived in December 2007, prepared by Washington Group International. It put pre-production capital at $398 million, up from $129 million in an earlier 2006 study, while the after-tax return fell from 77% to 33%. Major construction was pencilled in for mid-2008, subject to debt financing and permits.
That timetable did not hold. In November 2008 Geovic reported cash of $73.3 million, helped by a $15.2 million contribution from Cameroonian minority shareholders in GeoCam, but said financing and construction would be delayed by turmoil in credit and capital markets. It added that it did not expect to need the equity markets in the foreseeable future. In October 2009, after a 2008 drilling program of 2,045 holes, estimated mineralized material at Nkamouna and Mada rose 97% to 120.6 million tonnes, and GeoCam was now described as 60.5% owned.
The updated study slipped again in December 2010, with capital now expected at $600-$650 million. In April 2011 the final study by Lycopodium arrived: reserves of 68.132 million tonnes, initial capital of $617.2 million, an after-tax value of $669.6 million at an 8% discount rate (Geovic's share $405.1 million) and a 22% return. The refinery was dropped in favour of selling a mixed sulfide product. Financing was to be secured later in 2011, with construction planned for early 2012. Shares on issue rose only modestly over this period, from 104.3 million at the end of 2010 to 106.4 million in 2011, and the record does not explain the change.
2012-2014: Borrowing, delisting and a sale pending
The record is quiet for 2012 and most of 2013, and the project financing planned for 2011 does not appear to have been completed. Shares on issue stood at about 106.7 million by the end of 2013. In October 2013 the company disclosed its first debt in the record: $120,000 of one-year notes issued to related parties, including Richard G. Buckovic and Norman C. Rose, father of director Paul D. Rose. A further $100,000 followed in November. The notes carried interest of 200% a year and had to be prepaid within five business days after the announced acquisition of Geovic's 60.5% GeoCam stake by Jiangxi Rare Metals Tungsten Holdings Group. Completion of that sale is not confirmed.
The notes drew regulatory attention. On May 1, 2014 the Toronto Stock Exchange opened a review, saying it had not approved the notes, the key terms had not been announced, and it did not consider the interest rates commercially reasonable. On June 2 it decided to delist the shares effective at the close of market on July 3, 2014, citing financial condition, working capital, capital structure, compliance and disclosure.
On July 22, 2014 Geovic signed with Tangiers Investment Group an agreement to buy up to $3.0 million of stock over 36 months, at 85% of a recent low average price, subject to an effective SEC registration. Geovic also issued a $44,000 convertible note, convertible at 50% of a recent low trading price, and owed commitment-fee shares. As of August 8, 2014, the Jiangxi sale remained unconfirmed, and no share counts for the new issues had been given.
Written from the 11 story beats below (2007 to 8 Aug 2014), which come from the company's own announcements and filings.